Boeing wins $35 billion Air Force tanker contract

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by GLENN FARLEY / KING 5 News and Associated Press

Bio | Email | Follow: @GlennFarley

KING5.com

Posted on February 24, 2011 at 3:11 PM

Updated Thursday, Feb 24 at 7:02 PM

SEATTLE – Boeing has been awarded a $35 billion contract by The Pentagon to replace the Air Force's fleet of aging mid-air refueling tankers. It's news Boeing has been waiting to hear for a decade.

Boeing was pitting its 767 against Airbus' 330 for the deal for 179 jets.

The actual airplane will be built in Everett, Wash., with tanker modifications refueling boom and other military modifications made in Wichita, Kan with support from several other states.

Without the 767 tanker, the assembly line in Everett could have slowly closed down over the next three or five years. Airlines are largely switching over to the new  787. The tanker keeps this line open for decades to come.

Washington's Congressional delegation is happy and relieved.

"We are finally at a place where we know that the Air Force is going to be having their tankers built by American workers at a time when our economy needs it. It's good for today, but it's also good for our national security far into the future," said Sen. Patty Murray, D-Wash.

"I am so excited that we finally won this after three go-arounds," said Rep. Norn Dicks. "It's just the most important victory for Boeing, for the workers of our state."

For years, the delegation fought to make The Pentagon pay attention to just how much more it would cost to fly and maintain the larger Airbus 330.

In 2008, the Pentagon picked the Airbus jet, only to have that decision overturned.

The economic implications for Puget Sound are far-reaching.

"The supply chain that is over 100,000 people in Puget Sound will continue to build the parts and services that go along with those defense contracts," said Sen. Maria Cantwell, D-Wash.

Had Boeing lost, the next political battle would have been to ramp up the issue of subsidies – billions of dollars in European government payments that got the A330 into the air.

Subsidized or not, Boeing still beat the Airbus jet on price.

"This is a generational victory for what Boeing means and for what we do here in the state of Washington," said Rep. Jay Inslee, D-Wash.

The $35 billion could amount to a mere first installment on a $100 billion deal if the Air Force pushes ahead and buys more tankers.

It's not clear yet whether Airbus will protest the decision.

Through the years, the Air Force's efforts to award the contract have been undone by Pentagon bungling and the criminal conviction of a top Defense Department official.

In 2008, the Government Accountability Office upheld Boeing's protest of the tanker contract to Northrop and EADS, saying it found "a number of significant errors" in the Air Force's decision, including its failure to fairly judge the relative merits of each proposal.

The Air Force reopened the bidding in 2010 only to be embarrassed again as it mistakenly gave Boeing and EADS sensitive information that contained each other's confidential bids.

“The thorough and transparent selection process was marked by continual dialogue with offerors to ensure the Air Force had a clear understanding of their proposals and the companies clearly understood the service's analysis of their offers,” said Michael Donley, Secretary of the Air Force.

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